How to file for a divorce: equity and assets

Divorce is one of the most stressful things that a person can experience. Not only is it emotionally traumatic, but there is the financial aspect of divorce to consider as well. It is a popular misconception that if you divorce you and your ex-spouse will automatically receive half of all assets, money, investments etc - in reality it is not usually as simple as all that. It is also extremely important to get yourself a knowledgeable divorce attorney – one who is familiar with the particular rules in your state.

Currently most states are what are known as ‘equitable distribution’ states, which means that in the event of a divorce, the courts will decide who gets what. Assets and equity won’t necessarily be split between the two of you 50/50 – it may depend on your general financial situation, length of marriage, what each person contributed financially to the marriage, any existing debts, etc. It doesn’t usually make any difference whose name or money was used to acquire the assets to begin with, as once you are married they become joint assets.

Some states have what are known as ‘community property’ laws, where a couple’s assets are generally split down the middle between the two of them. The 9 states that currently have this law are Arizona, Idaho, California, Louisiana, New Mexico, Nevada, Texas, Washington and Wisconsin. Keep in mind that as well as equally splitting up assets, any debts are split between the two of you as well. The situation can get complicated – if you work or own property in different states, especially if one is an equitable distribution state, be sure to consult with an attorney about how to proceed.

Of course, the biggest asset you probably have is going to be your home. In most states the house is considered joint property even if the mortgage is under just one person’s name. The court does have the power to decide who keeps possession of the house during a divorce; although they would prefer that the couple decided it between them. There are several ways of handling the ownership of the home; it can be sold and then the proceeds split between husband and wife. One party can keep the home and refinance in their name alone perhaps in exchange for giving up other assets – make sure the details are spelled out clearly in the divorce agreement. If you keep the house as part of the agreement, make sure you can afford to, keeping in mind you will not have the income of your partner to rely on. Discuss with your ex-spouse who will be responsible for taxes, insurance and repairs on the house. It may be a better short-term solution to rent the house out until a more permanent solution can be agreed upon. There is no gain or loss as far as filing taxes goes, if the property is transferred from one partner to another. If you are about to get a divorce, have your house valued, and find out what it would sell for and what amount would be available in equity.

Cars are usually the next biggest asset. If a couple has two cars, it usually makes sense for them to keep one each. Keep in mind the monthly payments on the vehicle, that you will then be solely responsible for the payment if ownership is transferred to you.

Assets include such obvious things as your house and cars, also intangible things such as investments, stocks and shares, a pension or retirement plan. In a divorce the court takes into consideration the retirement accounts and investments of both parties, and in most states they are considered joint assets.

Then there are smaller assets such as jewelry, furniture and personal items. Some business people even consider frequent flyer miles to be an asset. If you are about to get a divorce, there are things that you can do to protect your share of assets – it’s a good idea to store your jewelry and other valuables such as titles and deeds in a safety deposit box. Start getting together all the paperwork that lists your joint assets and their values. This list will be useful when it is time for the court to decide who gets what. Smaller items such as books, ornaments and other personal items can generally be divided up amicably between the two of you. When talking to your spouse about dividing up assets, try to talk to him or her on neutral territory without any distractions such as work or children.

As far as daily finances go, you may want to consider canceling any joint credit cards or closing any joint bank accounts or investments. If you have any debts, individually or jointly, make a list of all debts, the amount owed and whose responsibility it should reasonably be. The time of year you file for divorce can be a factor - have you just filed your taxes? If so, in whose name will the refund check be – or will it be deposited in to your joint account? If your divorce has already been filed, it is generally too late to do all this – your assets and debts are now technically the court’s responsibility.

While assets are important in the long run, try not to focus too much on the material side of the divorce. It may be better for your emotional health and peace of mind especially if there are children involved, to try to have a more friendly and speedy settlement. Armed with some knowledge of how things work in your state, as well as a good divorce lawyer, you can help to make things go as smoothly as possible.